Canada-based automotive supplier Magna International Inc. (MGA: Quote,MG.TO: Quote) on Thursday reported a 24 percent increase in profit for the second quarter and affirmed its sales outlook for fiscal 2012. The company also said it has
agreed to buy the controlling minority stake in its electric car business.
Magna will buy the controlling 27 percent partnership interest in the Magna E-Car Systems L.P. partnership from a company affiliated with the Stronach Group for $74.67 million in cash. The company currently owns the remaining 73 percent non-controlling interest in E-Car.
Don Walker, Magna's Chief Executive Officer said, "We are pleased to regain control of Magna E-Car's assets and business, which will be absorbed within our existing operating units. We expect hybrid and electric vehicle ("H/EV") production to continue to grow globally in the future, and we believe that Magna stands to benefit from this trend by supplying H/EV components, systems and engineering services to our customers."
The company's second-quarter sales in North America rose 11 percent to $3.91 billion, while North American vehicle production volumes climbed 28 percent. Sales edged down slightly in Europe to $2.25 billion while vehicle production volumes dropped 7 percent in Western Europe.
Complete vehicle assembly sales decreased 11 percent to $645 million and complete vehicle assembly volumes declined 6 percent to around 33,000 units. Tooling, engineering and other sales rose 6 percent to $511 million.
Magna's second-quarter net income was $349 million or $1.48 per share, up from $282 million or $1.15 per share in the year-ago period.
On average, fourteen analysts polled by Thomson Reuters expected the company to report earnings of $1.28 per share. Analysts' estimates typically exclude special items.
Sales for the quarter rose 5 percent to $7.73 billion from $7.34 billion in the prior-year quarter and beat analysts' consensus revenue estimate of $7.54 billion.
The increase in sales reflects increases in the company's North American and Rest of World production sales and tooling, engineering and other sales, partially offset by decreases in complete vehicle assembly sales and European production sales.
Magna's board of directors declared a quarterly dividend of $0.275 with respect to its outstanding common shares for the quarter ended June 30, 2012. The dividend is payable on September 14, 2012 to shareholders of record on August 31, 2012.
Looking ahead to fiscal 2012, Magna affirmed its outlook for consolidated total sales of $29.0 billion-$30.5 billion. Analysts expect the company to report revenues of $29.67 billion for the year.
However, the company slightly raised its forecast for consolidated production sales to a range of $24.6 billion-$25.7 billion from the prior range of $24.5 billion-$25.6 billion.
MGA closed Thursday's regular session at $42.22, up $0.41 or 0.98 percent on a volume of 1.24 million shares. In after-hours, the stock further gained $0.78 or 1.85 percent to $43.00.
On the Toronto stock exchange, MG.TO closed Thursday's trading at C$41.79, up C$0.29 or 0.70 percent on a volume of 382,536 shares.
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by RTT Staff Writer
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